Apple Inc. is still the most valuable public firm in the world, and its record in tech is completely unmatched. The firm’s future relies on consistent sales of the iPhone 6S, however, and many on Wall Street have begun to worry that the firm just won’t be able to match sales records set in the fourth quarter of 2015. In the last three months of last year Apple sold 74.5 million iPhones. This year Wall Street is looking for the firm to do better but some doubt has been cast on that goal.
A recent report from research firm IDC suggested that Apple wouldn’t be able to match sales from 2015 this holiday period, but that forecast has been second -guessed by Wall Street research house Stifel. Aaron Rakers, an analyst from the firm, released a report on Thursday that highlighted some data that points to strong holiday sales for Cupertino.
Look at Apple Inc. suppliers
According to Rakers numbers from manufacturers building the iPhone look strong for Apple Inc. . He reckons that there is a strong correlation between the quarterly revenue from those firms and the overall sales at Apple. Hon Hai (Foxconn) and Pegatron, the two major iPhone makers, sales are up 9 percent year-on-year and 47 percent sequentially for the December quarter.
Mr. Rakers also took a look at China’s total mobile phone exports in November, a number reported by the country’s state organs. That figure rose 3 percent year on year in November, and Mr. Raker’s reckons that’s a great sign for Apple. Mr. Rakers established his correlations using a regression analysis of sales of the iPhone and the other variables, but he didn’t reveal his exact formula.
That, altogether, means a 4-5 percent upside to iPhone sales according to Rakers, and it’s a number that will be greeted with satisfaction by many holding Apple stock. He kept his Buy rating and a price target of $150 on the firm’s shares. Unfortunately for those shareholders, not everyone on Wall Street agrees with the assessment, and the firm’s shares have lost a whole lot of value as a result.
In a report published on Wednesday Kantar Worldpanel said that though iPhone market share fell in the third quarter, it seemed that the volume of sales as a whole was likely to keep pace with last year. The total share of iPhone 6S sold was lower than that of the iPhone 6 in the year before, but that may have more to do with the success of the iPhone 6 in the third quarter than any issue with adoption rates for Apple’s latest release.
Looking down on Apple Inc. iPhone sales
Back on November 10 Credit Suisse published a report stating that chatter in East Asia suggested that Apple Inc. had slashed orders for parts of its iPhone 6S by up to 10 percent. That report lead to fall in the value of Apple stock as traders worried about the future of the firm in the wake of an end to iPhone sales growth.
The IDC report on iPhone sales came in along the same lines, though it was published a lot more recently. On Wednesday the firm published a report which said that iPhone sales would come in at 226 million for the full year. That means that Q4 sales are thought to be lower than those in the same three months of 2015, a miss that some on Wall Street may find hard to bear.
On December 7 Pacific Crest published a report stating that sales of the iPhone would hit just 55 million in the first three months of the year. That, like the IDC number, is lower than the 59 million consensus estimate on Wall Street.
There’s a lot of contrary reports out there about iPhone sales figures, and they’re taking their toll on Apple Inc. stock. That’s caused a lot of pressure on the shares that has restrained the firm’s share price even as its capital return program keeps running, and iPhone sales keep breaking records.
Apple Inc. shares lose their way
As is the case for much of Wall Street, 2015 has been something of a lost year for Apple Inc. stock. Since the year began shares have gained about 5 percent, but all of that gain was secured in the wake of the firm’s iPhone sales numbers for the fourth quarter of last year. In the last six months shares in the firm have lost close to 10 percent of their value.
A fear that iPhone sales growth will stop with the iPhone 6S, and that Apple won’t be able to find anything to replace it with, appear to be driving fears about the firm’s future and depression in the price of Apple stock. Most of Wall Street, despite the reports questioning the firm’s future, appears to be hopeful about the firm’s future.
The consensus price target on Apple stock on Wall Street sits at $150, 28 percent above the price on today’s market. That’s a hefty price target, but it’s remained much higher than the value of Apple stock on the market for quite some time without acting as anything like a magnet for the shares.
There is just one analyst on Wall Street that’s advising traders Sell Apple stock, while 19 say that now is the time to Buy. A further 23 reckon that Apple stock will Outperform in the twelve months ahead.
There’s clearly something out of step between the way analysts are valuing Apple Inc. stock and the way the firm’s shares are perceived by the market as a whole. Perhaps the pressure of iPhone 6S sales is indeed what’s keeping the value of the firm’s shares low. We’ll have to wait until the firm’s December quarter earnings numbers arrive in January in order to see what effect meeting that target, or missing it, will have on the firm’s share price.